Outlook: Tote conundrum

O THE TOTE is going to be privatised, is it? Jack Straw's short statement announcing the privatisation yesterday appeared to decide the matter once and for all, but in truth this is just the beginning. It is all very well for the Government to agree in principle to the sale, but the real issue - that of who owns the Tote - has yet to be resolved. Until it is, nothing can happen. Certainly there is no possibility of sale this side of a general election, for any such disposal will require legislation.

The Tote was set up in 1928 as a "body corporate in perpetuity". This makes it a bit like the TSB before privatisation; technically, noone owns it. With the TSB, the question of ownership had to be settled by the courts. In the end, both interested parties - Treasury and customers - were sent away with a flea in their ear, and the proceeds of the sale went to the company itself.

This apparently considered judgement ended up benefiting noone but the City, which promptly set about fleecing the TSB of its inheritance. The money was duly blown on a number of worthless acquisitions. So though Peter Jones, the Tote's chairman, reckons he can find some good uses for the pounds 120m the company is expected to fetch, he's unlikely to get it. He was all ready to buy Coral until public sector constraints stopped him, and he can't wait to be freed from the shackles of Treasury control

The horse racing community, in the shape of the British Horseracing Board, believes the Tote belongs to the industry, or at least that any proceeds from a sale should be applied to its benefit. Given that the Tote was established "for the benefit of racing", it would seem to have a point. In some other countries, the Tote enjoys an absolute monopoly of on and off track betting, so its contribution to the business is much higher.

In Britain, the Tote's monopoly of pooled betting is countered by the power of the bookies, and its financial contribution to the industry is minimal. That might improve if the Tote was freed up to realise its full commercial potential as a business, but there is no evidence to suggest that it would be any more capable of doing this under the direct ownership of the British Horseracing Board than it is under the present setup.

The Treasury also thinks it has a claim. Already it takes a large share of the Tote's revenues through betting tax, but it wants some if not all of the privatisation proceeds too. This claim is based chiefly on the fact that the Tote operates under a license granted by the Government. Furthermore, those rotters at the Treasury don't feel inclined to make the necessary parliamentary time for the sale unless there's a kickback. Caught between a rock and a hard place, the Tote itself continues on its path of gentle decline. The way things are going, there will be no business left by the time this enterprise is finally sold.